Generate's AI Biotech Secures $65M from Novartis Deal, Approaches First Clinical Readouts

The AI-focused biotech company Generate:Biomedicines has secured a new collaboration with Swiss pharmaceutical giant Novartis. This partnership involves generating various protein therapies, with Novartis providing $50 million in cash and a $15 million equity investment, alongside potential milestone payments surpassing $1 billion. Specific details such as disease areas or the number of targets have not been disclosed. This alliance mirrors a similar ongoing partnership between Generate and Amgen, focusing on a spectrum of protein-based therapeutics, which may include antibodies, peptides, enzymes, or cytokines.

This deal underscores the pharmaceutical industry's growing interest in collaborating with AI-driven biotech firms. Recently, Novartis and Eli Lilly have also announced research partnerships with Alphabet’s Isomorphic Labs. Additionally, Genesis Therapeutics entered its third pharmaceutical partnership in four years, with Gilead providing an upfront payment of $35 million, while Superluminal Medicines closed a $120 million Series A funding round, including Eli Lilly among its investors.

Since Mike Nally, a former executive from Merck, took over as CEO in 2021, Generate has experienced rapid growth, raising over $600 million and advancing its first drugs to clinical trials. The company’s pipeline is nearing 20 different programs, with plans to file three to six Investigational New Drug (IND) applications within the next 12 to 18 months. The collaboration with Novartis will enable Generate to leverage its AI technologies across more drug programs, according to Nally.

Generate currently holds over $350 million in cash, partly due to the Novartis deal. This financial flexibility provides the company with different financing options, including a potential initial public offering (IPO). Nally emphasized that while going public might be considered, it is not a necessity for success, given the ample cash reserves and support from 25 institutional investors.

Last November, Generate made headlines by publishing on its AI model, Chroma, for de novo protein design. However, the lead programs nearing early clinical data are not de novo projects. Instead, the company uses AI to optimize multiple parameters of drug development, such as enhancing a drug’s binding affinity to its target while retaining crucial attributes like manufacturability.

Currently, Generate has two clinical programs: a Covid-19 antibody and an anti-TSLP antibody. For the Covid-19 program, interim Phase 1 data will be presented in October at the IDWeek conference in Los Angeles. After Phase 1, the development of the Covid-19 antibody will be paused due to market uncertainties and the high costs of large trials.

The anti-TSLP program, GB-0895, is also progressing, with initial data expected later this year from a single-dose study in mild-to-moderate asthmatics. Six-month clinical data is anticipated by late first quarter or early second quarter of 2025. This program will test whether Generate’s AI approach to molecular design can yield clinical benefits, as it targets proteins already addressed by existing treatments such as Amgen and AstraZeneca’s Tezspire for TSLP or Eli Lilly’s Ebglyss for IL-13.

The TSLP antibody from Generate has shown a 20-fold improvement in binding compared to Tezspire, potentially allowing for less frequent dosing. While Tezspire requires monthly injections, Nally is optimistic that GB-0895 could be administered every six months.

Future Generate antibodies will target IL-13, OX40L, and TL1A, each with significant improvements in binding affinity. The IL-13 antibody is slated to enter the clinic early next year. These internal programs are reaching clinical trials faster than the industry average, taking 18 to 24 months compared to the typical three to five years. Nally emphasized that the focus is not just on speed but on the quality of outcomes, which is being demonstrated by the company's initial programs.